The global financial system is undergoing a seismic shift, driven by the convergence of Artificial Intelligence (AI), advanced analytics, and robust digital infrastructure. These technologies are no longer just supplementary tools but are fundamentally changing how markets operate, capital is deployed, and economies connect. India is not only participating in this transformation but is positioned to be a leader in shaping its future.
India's Digital Foundation
Sanjiv Bajaj, Chairman and Managing Director of Bajaj Finserv, emphasized that India's strength in AI-led fintech and insurtech is rooted in its digital public infrastructure. He highlighted that digital advancements have broken down traditional barriers related to geography and access to capital. The Indian government's push for digital public infrastructure, including digital identity, bank accounts, payments, and KYC frameworks, has been crucial. Digital payments have become commonplace, with even small transactions routinely conducted via QR codes. India processes over 650 million digital payments daily, exceeding the rest of the world combined.
Beyond payments, India's demographic and entrepreneurial ecosystem contribute to its strong position in the global fintech landscape. The country boasts a large STEM-educated youth population, a substantial middle class, and a thriving startup ecosystem with over 200,000 registered startups.
Market Infrastructure Reinvented
Digital technologies are revolutionizing market infrastructure by reconfiguring trading, clearing, and settlement processes to enhance transparency, resilience, and speed. Distributed-ledger-based fixed income instruments issuance has gained traction, signaling a move towards digital market models. Platforms like LSEG's Digital Market Infrastructure demonstrate how blockchain technology can improve scale and capital formation efficiency.
India's financial system is maturing as it progresses towards becoming the world's third-largest economy. Equity, derivatives, and alternative asset markets are expanding, with increasing participation from institutional and retail investors. The inclusion of Indian sovereign bonds in global benchmarks like the FTSE Emerging Markets Government Bond Index signifies greater accessibility, investor confidence, and India's growing influence in global capital allocations.
AI-Driven Transformation
The effectiveness of AI in trading, surveillance, risk management, and investment workflows relies on accurate, timely data and responsible governance. AI is also fostering financial inclusion by enabling access to financial systems for previously excluded individuals and businesses through AI-powered credit scoring.
Challenges and Opportunities
Despite hosting a significant portion of the world's data, India has a relatively small share of global data center capacity. Addressing this gap is a strategic opportunity and a national priority to build AI data centers at scale. Investments in AI-ready infrastructure are crucial for India to realize its AI ambitions. To fully leverage AI capabilities and achieve its development potential, India needs enabling policies that encourage industry commitment to its AI journey.
Global Collaboration
Startup Policy Forum (SPF) and the Global Finance & Technology Network (GFTN) have formed a collaboration to promote fintech and digital innovation through coordinated policy engagement, ecosystem development, and cross-border growth programs. This partnership aims to strengthen global-India innovation corridors, facilitate policy dialogue between regulators and industry, and support the international expansion of Indian startups. Priority areas include digital finance infrastructure, responsible AI, digital assets, cross-border payments, and regulatory innovation.
The Road Ahead
As AI and digital infrastructure reshape global finance, India is well-positioned to lead. By leveraging its digital foundation, fostering innovation, and promoting responsible AI governance, India can transform its financial landscape and contribute to the evolution of the global financial system. Sustained effort and strategic collaborations are essential to maintain this lead and ensure long-term success.